PSC: Miss. Power should justify Kemper coal plant spending

JACKSON -- Regulators say Mississippi Power Co. needs to submit more evidence that it has spent money prudently on the power plant it's building in Kemper County.

The state Public Service Commission voted 3-0 Tuesday to require more information from Mississippi Power on the $4.75 billion it is spending to build the coal-fueled power plant in eastern Mississippi. The Sierra Club, which opposes the plant, had asked commissioners to reject the spending by the subsidiary of Atlanta-based Southern Co.

Commissioners had planned to put off reviewing spending until the Kemper plant was finished, but agreed in a settlement with Mississippi Power to examine some costs earlier. Tuesday's action sets the hearing for May 2014. That was supposed to be the month when the plant goes into commercial operation, but the company recently announced it wouldn't meet that deadline. If the PSC rejects some of the spending as imprudent, it could add to the $1 billion in costs that shareholders have already agreed to absorb.

Tuesday's order says the commission will assume spending was wise, but said the company must say more about how it managed spending. Regulators also want information on the differences between original cost estimates and current forecasts.

The project, including a mine and pipelines, is more than $1.5 billion over budget from original estimates.

Two commissioners differed on the order's significance.

"We're just looking for additional information," said Central District Commissioner Lynn Posey, a Republican who has supported the plant.

But Northern District Commissioner Brandon Presley, a Democrat, said the order raises the burden of proof on Mississippi Power.

"They've got to prove that the decisions they made were decisions an economical, efficient, well-managed utility would make," said Presley, a Kemper opponent.

Company spokeswoman Amoi Geter said Mississippi Power believes much information is already on hand because of the work of firms hired by the regulators to monitor the project.

"It appears that much of the information requested by the commission has already been compiled and provided to the staff and commission consultants as part of their ongoing monitoring activities of the Kemper project," Geter wrote in an email.

But the order could open the door to a challenge of the company's decision to continue after construction spending increased.

"Prudency governs a public utility's continuation of an investment as well as its decision to enter into that investment ... and requires the utility to respond prudently to changing circumstance or new challenges that arise as the project progresses," the commission wrote, quoting a 1991 order from Louisiana.

Sierra Club lawyer Robert Wiygul said the commission needs to scrutinize decision-making during construction.

"Prudence is not just in the initial phases and authorization of the project, but throughout," he said.

The company continues to argue for the plant, which is designed to gasify lignite and burn it to generate electricity, capturing carbon dioxide and other chemicals. Mississippi Power President Ed Holland told the Southern States Energy Board Monday in Biloxi that burning coal will provide "economic security" for the United States.

"We think that the Kemper technology, what is being done in Mississippi, is the future of coal," Holland said.